Investment advice

Periodically, fellows will ask me for my advice on the markets.  I’m well aware that most of them are approaching it with a talking dog in mind – oh look, an intelligent escort, hur hur.  I don’t know if anyone ever took my advice, though I’d be interested to find out how they did.  Watching my recommendations, they ought to have done well by it.

My response was the same no matter who asked.  First, the caveat that I am not a certified financial advisor, that I was not talking my book (sold the last more than a year ago) and they’re asking someone they met online.*  A year ago, I always said gold, silver, oil and, if you were feeling frisky, copper.  Six months ago, I told everyone to run like hell – take their ball and go home.  The market no longer exists, it’s been replaced with a casino, and while some lucky dog’s gotta win… it probably won’t be you.

Having an account with the Bank of Sealy isn’t a good long-term solution, though.  Whatever Bernanke says, we’re in an inflationary environment and, while keeping your life’s savings in your mattress means you won’t lose it as fast as you would in the market, the point is that you’ll still lose it as inflation erodes away its value.

Two potential solutions here, and they both involve investing in people rather than markets.

The traditional safe plays in an inflationary economy are debt and goods.  I understand the argument with debt; if you take on debt today, you’ll pay it back tomorrow with currency that is cheaper.  I still don’t like it.  This is not an economy wherein additional obligations would bring happy thoughts.  Thus it is that I favor the second play – buy stuff.  It’s the same argument as debt, only in the other direction and it leaves you holding something tangible.  Tomorrow, things will cost more due to currency devaluation/price inflation.  So buy it today.

Take, for e.g., your grocery bill.  You’re going to buy a certain amount of groceries every week no matter what.   Price inflation at the grocery store has been particularly rabid over the last year(s).  It may surprise you, but you can get quite a nice return by making your usual supermarket purchases in big bulk lots.  Say you find your brand of toothpaste on sale for 94 cents.  Buy two dozen of them.  A year from now, when your brand of toothpaste is $1.97, you’ve got yourself a tidy little profit.

Now parlay that out across your entire grocery bill.

Sure, you can’t do it with everything.  Fresh bread and meat, cream, produce, these things have to be bought fresh and cannot be stored as-is.  But if you’re sitting on a shitload of financials and are desperately looking for a better place to put it, trade it in for “things”.  You’ll use it all eventually, including a little place to retire on and a plot in the graveyard, and I guaran-damned-tee we aren’t going to have a strong dollar any time soon.

The first solution is to invest in yourself.  Buy all the things today, at the best price you can find, which you know you’ll be using eventually.  The second solution is to invest in others.

Small business creates more jobs in America than any other element of the market.  Small business owners work ridiculous hours and pour their blood, sweat and tears into their dream, all in the full knowledge that it may not work out.  What helps entrepreneurs the most is an injection of outside capital.

This solution is trickier.  You’ll have to find a likely person who you know to be a hard worker, with a great idea and solid business sense (and since everyone is a fucking moron these days, that’s a tall order).  Even then, you may not see a return if the business fails.  Still, all things being equal, investing in the local small businesses is a smarter move with a better likely return than in the stock markets.

And that’s my investment advice these days.  Let the stock markets go bugger themselves.  Invest in yourself, and invest in local business.

* Yes, for the most part, I think it’s silly to ask someone you met online what to do with your money.  But, since everyone I meet online is a grown adult and therefore old enough to wipe their own ass…  On the other hand, it’s demonstrably far better to listen to me than to fucking Cramer.

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Published in: on September 8, 2011 at 8:00 pm  Leave a Comment  

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